ID Form 8858 2024-2025

ID Form 8858: What You Should Know

US Persons With Respect to Foreign Disregarded Entities and Foreign Disregarded Entities Form 8858 is intended to disclose information about ownership of U.S. entities (as a US person) that own, directly or indirectly, a foreign disjointed entity (FEE) of another country. In addition, Form 8858 forms are used for the purpose of determining tax credit eligibility when an entity is a FEE. How To Use Form 8858 — Disregarded Entity You must disclose all the following information on a regular basis about each foreign disregarded entity that you own or indirectly own: Form 8858 and Disregarded Entities To determine if an entity is a FEE, the entity reports its foreign business activities (excluding dividends, interest, and capital gains) and assets (excluding cash and cash equivalents) on a Form 8858, Schedule A (or a similar schedule). A foreign FEE should show a foreign business activity listed (a reportable country code that represents the country to which the FEE conducts income tax examinations) on the Schedule A. The Schedule A information should be the equivalent of Form 8858. A foreign FEE may be eligible for the foreign capital gains exclusion, the foreign investment income exclusion, or the foreign accrual withholding exclusion (which allows companies that are a foreign FEE to have their non-U.S. business activities taxed at the same rate as U.S. business activities). Disputing a Failure, Denying Excess Exclusion, or Denying Excess Investment Income The IRS does not consider income or deductions to be “excess,” “gross-up,” or “reduced” for purposes of this provision if they exceed the exclusions, reductions, or exclusion.  A foreign FEE is “required” to file the information return if the entity reports it has an FEE of 10.0 million or less. The failure to report would be considered a failure, denying an excess exclusion, or denying an excess investment income exclusion; the denial of exemptions under “excess” could have a direct adverse impact in that the foreign FEE could no longer claim the foreign accrual withholding or foreign bank account withholding exemptions and the FEE would need to change to a reporting entity that is not a domestic FEE before being eligible for any exemption. If the foreign FEE has an FEE greater than 10.

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